Withdrawing from UK pension but living abroad

d4006

Hi,
I'm a Brit that was born and lived and paid taxes in the UK until the late '90s, at which point I moved abroad and de-registered from the tax system in the UK (naturally). I've been working and paying my taxes in Germany since then and am still doing it and paying top rate tax.
With age 55 arriving soon, and having a UK private pension 'back home', I'd really like to take all of the money out of it. As this would effectively be supplemental income, I imagine it would be at my top rate of tax. For that reason, I'm imagining that I might as well take it all as one lump sum (if that's allowed). As I'm not UK tax registered, I wouldn't have any kind of tax free withdrawal possibilities.
What I don't want to do is leave it all in there. As I'm not married and have no kids, I'm not even sure if anyone would inherit it if/when I pop[ped] my clogs. If someone tells me "don't worry, it'll be inherited by whoever you specify in your will (as part of your estate)" then I'm less inclined to take it out. 

Marcon

d4006 said:

Hi,
I'm a Brit that was born and lived and paid taxes in the UK until the late '90s, at which point I moved abroad and de-registered from the tax system in the UK (naturally). I've been working and paying my taxes in Germany since then and am still doing it and paying top rate tax.
With age 55 arriving soon, and having a UK private pension 'back home', I'd really like to take all of the money out of it. As this would effectively be supplemental income, I imagine it would be at my top rate of tax. For that reason, I'm imagining that I might as well take it all as one lump sum (if that's allowed). As I'm not UK tax registered, I wouldn't have any kind of tax free withdrawal possibilities.
What I don't want to do is leave it all in there. As I'm not married and have no kids, I'm not even sure if anyone would inherit it if/when I pop[ped] my clogs. If someone tells me "don't worry, it'll be inherited by whoever you specify in your will (as part of your estate)" then I'm less inclined to take it out. 

If it's a defined contribution scheme, you should be able to take the lot as cash. 

A bit of simple googling would get you the answer that yes, it can be left to someone in your will. The tax treatment varies depending on your age when you die: https://www.gov.uk/tax-on-pension-death-benefits

You seem to be doing quite a bit of imagining in your question. Might be an idea to establish the facts from the German tax authorities, in case that helps the decision process.

TBC15

If you have a UK passport I think you still get your personal allowance.

[Deleted User]

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

This has nothing to do with his passport and everything to do with  taxation rules in the country where OP resides. 

Marcon

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

How on earth would that work? Depends on entirely on the tax domicile, not the nationality of the individual concerned.

Joey_Soap

Highly recommended that anyone in a similar situation reads the UK > Other Country dual taxation agreement. Most countries have them. There is always a section specifically related to pensions and it is actually pretty clear in the ones I have read regarding where your pension is taxed. If there's a dual taxation treaty in force, you will pay tax but only in one of the two countries party to the agreement. The same income is never fully taxed twice over under such an agreement. HTH.

nigelbb

Don't forget to pay voluntary National Insurance Contributions to maximise your UK state pension. As you live & work abroad you can pay Class 2 NI at about £150 for each added year which buys you a pension of about £250/year. Given average life expectancy at pension age that's worth over £5,000. Not bad for an outlay of £150!

TBC15

Marcon said:

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

How on earth would that work? Depends on entirely on the tax domicile, not the nationality of the individual concerned.

Sorry about that I was just going on what HMRC say and the fact I’d been doing it for a couple of years

 

You’ll get a Personal Allowance of tax-free UK income each year if any of the following apply:

·        you hold a British passport

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

TBC15

Deleted_User said:

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

This has nothing to do with his passport and everything to do with  taxation rules in the country where OP resides. 

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

Marcon

TBC15 said:

Marcon said:

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

How on earth would that work? Depends on entirely on the tax domicile, not the nationality of the individual concerned.

Sorry about that I was just going on what HMRC say and the fact I’d been doing it for a couple of years

 

You’ll get a Personal Allowance of tax-free UK income each year if any of the following apply:

·        you hold a British passport

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance

Thank you - never knew that!

[Deleted User]

TBC15 said:

If you have a UK passport I think you still get your personal allowance.

It will depend on the double taxation treaty - in most countries only government pensions are taxed in the UK (with the above allowance) but if you have a secondary income in the country you are tax resident then you may move into a different tax band there (due to the offset)
Personal pension income is normally taxed only in the country of tax residency